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TMI Blog2017 (3) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants have formulated six substantial questions of law, but after some arguments, we find following three substantial questions of law arising in these appeals. Learned counsel for parties have also agreed and addressed us on these substantial questions of law:- I). Whether order dated 25.03.2014 passed by C.I.T. under Section 263 of Act, 1961 was beyond its jurisdiction, in the facts and circumstances discussed by Tribunal, and whether it (Tribunal) was justified in holding so; II). Whether Assessing Authority could have examined applicability of Sections 11 and 12 when Trust or Institution is already granted registration under Section 12A after following procedure laid down under Section 12AA of Act, 1961; and III). Whether Tribunal was justified in holding that applicability of Sections 11 to 13 was to be governed by C.I.T. (A)'s order dated 21.11.2013, which was passed in appeal against order dated 28.12.2010 and that being so, order dated 01.12.2001 passed by Assessing Authority was in the same line, hence C.I.T. had no jurisdiction to pass order under Section 263 of Act, 1961 questioning applicability of Sections 11 to 13 in the case in hand. 3. Before dealing with af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 5,15,81,970/- 8,39,39,820/- 12,06,04,570/- Demand raised 12,49,941/- 1,35,47,688/- 3,76,85,344/- 4,37,21,360/- 6,93,66,047/- 8. Assessing Authority disallowed claim of exemption under Section 12A relying on C.I.T.'s order dated 08.03.2010 since that was operating on the date of assessment order passed by Assessing Authority. It further proceeded to assess status of Assessee that of Association of persons, as a business entity, and verified nature of quantum of expenses in relation to activity of Assessee namely imparting education. Assessing Authority disallowed certain expenses for reasons such as expenses being not made for business purpose or lacking in documentary evidence or explanation justifying particular expenditure were capital in nature. 9. The order dated 28.12.2010 was appealed by Assessee before C.I.T.(A). Appeal was allowed partly vide order dated 21.11.2013 and expenditures claimed by Assessee which were disallowed by Assessing Authority vide order dated 28.12.2010 were allowed by C.I.T.(A). 10. During pendency of appeal before C.I.T.(A), since C.I.T.'s order dated 08.03.2010 stood set aside by Tribunal's vide order dated 21.06.2011, As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been allowed. The order passed by C.I.T. under Section 263 has been set aside. It is in these circumstances, Revenue has preferred these appeals. 15. C.I.T. passed order dated 25.03.2014 ignoring the fact that another co-ordinate authority in statutory quasi-judicial proceedings has already held Assessee entitled for certain exemption/benefits. Tribunal has noticed this fact, referring to C.I.T.(A)'s order dated 21.11.2013, in its order as under: "The said order remained under challenge before the ld. CIT(A) who vide order dated 21.11.2013 for the assessment year 2003-04 allowed certain relief to the assessee because the registration u/s 12AA have been restored in favour of the assessee and disallowance of expenses were examined in the light of provisions of section 11 of the IT Act. Certificate of the auditor was also considered and at PB-177 and 179 (internal page of the order 23 to 25), the ld. CIT(A) examined the issue in the light of registration restored to the assessee u/s 12A and examined the expenses with application of income u/s 11 of the IT Act. The ld. CIT(A) also considered those expenses which stand the test of genuineness and application of funds for char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rger as recognized in Act, 1961 in the light of various authorities on the subject. The relevant part of the judgment reads as under: "21. The above general concept of 'merger' in respect to judicial and quasi-judicial orders has been considered and recognised time and again. 22. In Chandi Prasad and Others Vs. Jagdish Prasad and Others [2004 (8) SCC 724], the Court said: "It is trite that when an Appellate Court passes a decree, the decree of the trial court merges with the decree of the Appellate Court and even if and subject to any modification that may be made in the appellate decree, the decree of the Appellate Court supersedes the decree of the trial court. In other words, merger of a decree takes place irrespective of the fact as to whether the Appellate Court affirms, modifies or reverses the decree passed by the trial court." (emphasis added) 23. In Gangadhara Palo Vs. The Revenue Divisional Officer & Another [2011 (4) SCC 602), the Court said : "According to the doctrine of merger, the judgment of the lower court merges into the judgment of the higher court. Hence, if some reasons, however meagre, are given by this Court while dismissing the special lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 242 ITR 659 (SC)], a question arose whether Commissioner can exercise power under Section 263 of Act, 1961, while agreeing with the order of assessment against which appeal is pending before Commissioner (A), involving the point upon which notice under Section 263 is issued, the Court up held the notice issued under Section 263 and held that such notice can be issued. 30. The decision in CIT Vs. Abuda Mills Ltd. (Supra) has also been followed by this Court in CIT Vs. Dhampur Sugar Mills Co. Ltd. [(2004) 270 ITR 576 (All)], CIT Vs. Indo Persian Rugs [(2008) 299 ITR 300 (All)] and CIT Vs. Span International [(2004) 270 ITR 538 (All)]. 31. In CIT Vs. Amrit Banaspati Co. Ltd. [(2005) 277 ITR 559 (All)], Court held that in respect of items which have not been considered in appeal, power of Commissioner under Section 263(1) shall be extended to that extent." 21. Tribunal has also looked into the said aspect of the matter and in para 14.1 and 18, has said as under: "14.1. Section 263(1)(c) of the IT Act provides that where any order referred to in this sub-section and passed by the AO had been the subject matter of any appeal, the powers of CIT under this sub-section shall extend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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